Monthly Current Affairs February 2020

Easy to PICK151 - “UPSC Monthly Magazine” How many firms are in bankruptcy What does this mean for the IBC courts? system? As can be seen from the chart, the number At the current rate of disposal of cases by of companies being admitted to corporate NCLT, it could take nearly five-six years insolvency resolution proceedings at the for the most important cases to be settled. National Company Law Tribunal (NCLT) There is also a risk that the new system is has shot up since January-March in 2017. getting overloaded with too many The number of such companies was 1,961 corporate defaults being brought under as of December 2019, up from 1,497 as of CIRP. One way to get around this hurdle is September. What the data indicates is that by encouraging banks to sell smaller loan the number of companies facing defaults of up to Rs.100 crore and not take insolvency resolution is piling up at NCLT them to NCLT, so as not to clog the IBC faster than it can dispose of them. This is system. the problem Debt Recovery Tribunals used to face earlier.

Easy to PICK152 - “UPSC Monthly Magazine” Possibility of India-US trade deal Syllabus subtopic: Bilateral, Regional and countries, which have a competitive Global Groupings and Agreements edge over India in terms of lower involving India and/or affecting India’s wage costs. interests.  However, this is unlikely to happen Prelims and Mains focus: about Trump’s with the US as a trade deal will result visit and its impact on India-US relations; in a significant expansion of trade, the possibilities and the areas where while simultaneously giving Indian bilateral trade could get a boost. firms greater market access to one of the largest economies. A deal can also News: A trade deal during US President be instrumental in resolving problems Donald Trump’s visit is unlikely. But a related to the mobility of Indian changing geopolitical landscape, coupled professionals. with closer ties with the US, makes a deal that benefits both nations inevitable. How is an India-US deal different from the others? What’s the state of Indo-US trade ties? A trade deal with the US could address  Bilateral trade between the US and issues related to tariffs and lead to India being viewed as an alternative for India has been increasing, with the companies implementing a China+1 US recently surpassing China to policy. This could result in sizeable become India’s biggest trading investments in the manufacturing sector partner. The US is also one of the few and deeper integration of India in global countries with which India has a value chains. A deal would of course help trade surplus, which stood at $16.85 expand Indian exports further. billion in 2018-19. Will it deepen India’s trade with the  The trend continued during April- world? December 2019. Bilateral trade  World trade has seen a tectonic shift in between the two countries was valued at $68 billion during this period in the last couple of years as production contrast with the $64.96 billion with activity has become extremely China for the same duration. China specialized and globalized. The was India’s top trading partner recent wave of protectionism has led between 2013-14 and 2017-18. Prior to the emergence of regional trading to this period, India’s largest trading blocs, where such value chains are partner was the United Arab shaping up. Emirates.  Geopolitics also plays a role. The How will a deal impact bilateral trade? recent increase in oil purchase from  Historically, India’s trade agreements the US and other strategic allies hints at deeper trade ties in the years ahead. have not given its exporters the kind of A deal with the US may lead to a benefits that were expected. Oft-cited workable framework for similar deals reasons include lack of awareness with the UK and European Union. among exporters and the country’s focus on trade deals with developing

Easy to PICK153 - “UPSC Monthly Magazine” So, why does a deal remain elusive? The deal may be delayed due to limited consensus on its scope, combined with India’s reluctance to offer greater market access in areas such as communications technology, agriculture and medical devices. India’s agricultural sector remains a bottleneck for the signing of a trade deal with most developed nations, so a limited deal without addressing this issue is unlikely. But as the gains from a deal would be significant, it would be signed sooner rather than later.

Easy to PICK154 - “UPSC Monthly Magazine” Sedition cases in India : NCRB data Syllabus subtopic: Indian Constitution— were charged with sedition while in Historical Underpinnings, Evolution, 2019, more than 3,300 farmers were Features, Amendments, Significant charged with sedition for protesting Provisions and Basic Structure. about land disputes. Prelims and Mains focus: about sedition Less conviction and its reason law: cases related and NCRB data on it  Though police in these states and News: The latest National Crime elsewhere are charging more people Records Bureau (NCRB) data suggest with sedition, few cases actually that sedition law remains as relevant as result in a conviction. Since 2016, ever with sedition arrests increasing in only four sedition cases have seen a recent years. conviction in court. How is sedition defined under the law?  One reason for this could be that Sedition, which falls under Section 124A sedition as an offence has no solid of the Indian Penal Code, is defined as legal grounding in India. The Indian any action that brings or attempts to Constitution lays out freedom of bring hatred or contempt towards the expression as a fundamental right government of India and has been illegal which many legal scholars have argued in India since 1870. prevents sedition from being an offence. NCRB data The National Crime Records Bureau About Unlawful Activities (Prevention) (NCRB), though, has only been collecting Act (UAPA) and its comparison with separate data on sedition cases since Sedition law 2014. In 2014, there were 47 cases of  In 1967, the government enacted the sedition but that number increased to 70 in 2018 (the latest year with available Unlawful Activities (Prevention) Act data). (UAPA). This was meant to be a more specific law intended to impose Cases of sedition more reasonable restrictions on  Compared to other offences, sedition freedom of speech in the interests of sovereignty and integrity of India. remains a rare crime (it accounts for less than 0.01% of all IPC crimes).  In 2018, there were 1,182 cases But within India, some parts are registered under UAPA. And almost emerging as sedition hotspots. all these cases (92%) were concentrated in five states (Uttar  Assam and Jharkhand, for instance, Pradesh, Jammu and Kashmir, Assam, with 37 sedition cases each, account Jharkhand and Manipur). for 32% of all sedition cases between 2014-2018. In Jharkhand, the police  Because of its use to clamp down on have used sedition to charge different dissent, the UAPA has faced similar types of protesters. In January, more criticisms as the sedition law. And than 3,000 protesters against the the joint existence of a sedition Citizenship Amendment Act (CAA)

Easy to PICK155 - “UPSC Monthly Magazine” offence and the UAPA governing the before it could deliver its same category of offence makes little recommendations. sense.  Any recommendation, though, would  UAPA and sedition though are just have likely fallen on deaf ears. Over two of the many offences that can be time and across different parties, the committed against the state. Under Indian government’s stance has been the NCRB’s breakdown of offences consistent on sedition. When asked in against the state, the biggest offence Parliament if sedition is likely to be comes under the Prevention of revoked soon, the current minister of Damage to Public Property Act. The state in the home ministry was succinct Act, which lays down the law about but clear in his response “There is no damage to public property, accounted proposal to scrap sedition. There is a for more than 80% of all offences need to retain the provision to against the state in 2018 and has effectively combat anti-national, increased since 2016. secessionist and terrorist elements.\" A new category by NCRB  NCRB, starting in 2017, introduced a new category of crime: incidents of violence by “anti-national elements\". These anti-national elements - bucketed into four groups: north-east insurgents, ‘Jihadi’ terrorists and Naxalites and other terrorists - had 1,012 cases registered against them in 2018.  But of all these offences, sedition remains the most controversial. Attempts at revoking the sedition law  Globally, sedition is increasingly viewed as a draconian law and was revoked in the United Kingdom in 2010.  In India itself, there have been two attempts, via private member bills, in the last decade to revoke it - but both efforts were thwarted by governments.  More recently in 2018, the 21st Law Commission of India issued a consultation paper asking for views on revoking sedition as an offence but the commission’s term ended

Easy to PICK156 - “UPSC Monthly Magazine” Asian Development Bank Syllabus subtopic: Important International  It also can’t be used for investing in Institutions, agencies and fora - their capital markets, purchase of land and Structure, Mandate. on-lending to other entities for such activities as stated above. Prelims and Mains focus: about masala bonds; about Asian development bank About Asian Development Bank  It is a regional development bank News: Asian Development Bank (ADB) has listed its 10-year masala bonds worth established on 19 December 1966. Rs.850 crore on the global debt listing platform of India INX (BSE-owned  Headquartered in the Ortigas Center exchange). located in the city of Mandaluyong, Metro Manila, Philippines. About the move and its significance  The proceeds would be used to  The bank admits the members of the United Nations Economic and Social support local currency lending and Commission for Asia and the Pacific investment in India. (UNESCAP, formerly the Economic Commission for Asia and the Far East  ADB’s masala bonds are listed on both or ECAFE) and non-regional Luxembourg exchange and India INX. developed countries. From 31 members at its establishment, ADB  This is the first time a foreign issuer now has 68 members. and a supranational is doing a primary listing with India INX. This  The ADB was modeled closely on the will help further in making GIFT World Bank, and has a similar IFSC (Gujarat International Finance weighted voting system where votes Tec-City -- International Financial are distributed in proportion with Services Centre) a global hub for members' capital subscriptions. ADB fund raising by Indian and Foreign releases an annual report that issuers. summarizes its operations, budget and other materials for review by the What are masala bonds? public. ADB is an official United  Masala Bonds are rupee-denominated Nations Observer. bonds i.e the funds would be raised  As of 31 December 2016, Japan holds from overseas market in Indian rupees. the largest proportion of shares at  Any corporate, body corporate and 15.677%, closely followed by United Indian bank is eligible to issue Rupee States with 15.567% capital share. denominated bonds overseas. China holds 6.473%, India holds 6.359%, and Australia holds 5.812% Conditions:  RBI mandates that the money raised through such bonds cannot be used for real estate activities other than for development of integrated township or affordable housing projects.

Easy to PICK157 - “UPSC Monthly Magazine” India-US Comprehensive Global Strategic Partnership Syllabus subtopic: Bilateral, Regional and  They called for concerted action Global Groupings and Agreements against all terrorist groups including involving India and/or affecting India’s Al-Qaeda, ISIS, Jaish-e-Mohammad, interests. Lashkar-e-Taiba, Hizb-ul-Mujahideen, Prelims and Mains focus: about the visit the Haqqani Network, TTP, D and its highlights; cooperation in various Company, and all their affiliates. sectors News: US President Donald Trump  Both sides also took note of the efforts concluded his maiden 2-day visit to India. of the ASEAN region to create a code of conduct in the South China Sea Key highlights region. They also agreed to undertake  India and the U.S. resolved to upgrade development activities in third countries and intensify cooperation their bilateral relationship to a in the space domain Comprehensive Global Strategic Partnership that will include issues  Both sides had resolved to maintain such as defence, security cooperation the Internet as a free and secure and revitalisation of the Indo-Pacific arena. India and the United States quadrilateral dialogue consisting of recognised the need for an innovative Japan, the U.S., India and Australia. digital ecosystem that is secure and  Both sides also called upon Pakistan reliable, and facilitates the flow of to rein in cross-border terror threats information and data. and sought justice for the victims of 26/11 attack and the Pathankot  Both countries were also working on terror attack of 2016. cybersecurity and counter-terrorism issues.

Easy to PICK158 - “UPSC Monthly Magazine” Insurance Regulatory and Development Authority of India (IRDAI) Syllabus subtopic: Statutory, Regulatory allowing life insurers to offer indemnity- and various Quasi-judicial Bodies. based health policies. Prelims and Mains focus: about the move Present scenario and its significance; about IRDAI As of now, only general insurance firms and specialised health insurance News: The Insurance Regulatory and companies are allowed to offer Development Authority of India (IRDAI) indemnity-based health policies. is considering the possibility of allowing life insurance companies to offer health Opposition to the move policies despite opposition from general 1. The General Insurance Council, the insurance companies. apex body of general insurers, has Background opposed the proposal.  The IRDAI move follows intense 2. Another complaint against life insurers lobbying by private life insurance is mis-selling. The indemnity based companies for an entry into the fast- health insurance business needs growing health insurance segment. enormous claims handling capacity and that too under very tight time lines  IRDAI (Health Insurance) which life insurance companies don’t have capability and experience of. Regulations 2016 allow life insurance What is an indemnity-based health companies to offer benefit based health insurance plan?  According to insurance experts, in an insurance products only. indemnity-based health insurance plan, Representations have been received the policyholder is reimbursed the cost of medical expenses. These plans from life insurance companies to allow will reimburse the policyholder with the actual amount incurred as expenses them to offer indemnity products as during a hospitalisation stay up to the sum insured under the policy. If well. a policyholder chooses a sum insured amount of Rs 5 lakh and is presented  Insurance Act, 1938 vide Insurance with a hospitalisation bill amounting to Laws (Amendment) Act 2015 Rs 2 lakh, the insurance company will recognised health Insurance as a pay out Rs 2 lakh to the policyholder. separate class of business. Historically, The policyholder is required to submit health insurance is recognised as one hospital bills detailing the expenses of the important elements of incurred during the hospital stay. healthcare and health insurance premiums have been registering a significant compounded annual growth of around 20 per cent in the preceding 10 years in India. About the move The regulator has set up a nine-member committee to study the feasibility of

Easy to PICK159 - “UPSC Monthly Magazine”  On the other hand, a fixed benefit Functions: health plan is one where a fixed  Protect the rights of insurance policy amount of funds (the sum insured) is paid out to cover expenses for a holders. predetermined illness or condition  Provide registration certification to life that has been insured. insurance companies Health insurance Premium  Renew, modify, cancel or suspend this  During FY 2017-18, insurance registration certificate as and when companies collected Rs 37,029 crore as appropriate; promote efficiency in health insurance premium registering a conduct of insurance business growth of 21.8 per cent over the  Promote and regulate professional previous FY 2016-17. The share of organisations connected with insurance group health insurance was the highest and reinsurance business; regulate at 48 per cent, followed by individual investment of funds by insurance business (41 per cent) and the companies government business (11 per cent).  Adjudication of disputes between insurers and intermediaries or  Five states — Maharashtra, Tamil insurance intermediaries Nadu, Karnataka, Delhi UT and Gujarat — contributed 68 per cent of total health insurance premium. As per IRDAI Annual Report 2017-18, the insurance sector has covered 48 crore number of lives under health insurance, out of which 36 crore number of persons are covered under various government schemes.  The industry has processed 1.6 crore number of health insurance claims during that year. The PMJAY scheme launched in September 2018 had 18 lakh plus pre-authorizations approved amounting to over Rs 2,400 crore as on March 31, 2019. Another major concern in health insurance business is skewed distribution of health business across various states and union territories. About IRDAI It is an apex statutory body that regulates and develops insurance industry in India. It was constituted as per provisions of Insurance Regulatory and Development Authority Act, 1999. It is headquartered in Hyderabad.

Easy to PICK160 - “UPSC Monthly Magazine” Arab Spring Syllabus subtopic: Effect of Policies and Syria, the old autocracies would be Politics of Developed and Developing replaced with new democracies. Countries on India’s interests, Indian Diaspora.  But Tunisia is the only country where the revolutionaries outwitted Prelims and Mains focus: about the Arab the counter-revolutionaries. They Spring and its features overthrew Zine El Abidine Ben Ali’s dictatorship, and the country News: Hosni Mubarak, the Egyptian transitioned to a multi-party leader who for nearly 30 years was the democracy. resolute face of stability in the Middle East, died on 25th February, ending his  But except Tunisia, the country- days after a swift and ignominious tumble specific stories of the Arab uprising from power in the Arab world’s pro- were tragic. democracy upheaval.  Though Tunisia’s president fell before Features  The Arab uprising was originally him, the ouster of Mr. Mubarak was the more stunning collapse in the face triggered by a combination of factors. of the Arab Spring shaking regimes across the Arab world.  The economic model based on patronage was crumbling in these What was the Arab Spring? countries.  The Arab Spring was a series of pro-  The rulers had been in power for democracy uprisings that enveloped decades, and there was popular longing several largely Muslim countries, for freedom from their repressive including Tunisia, Morocco, Syria, regimes. Libya, Egypt and Bahrain.  More important, the protests were  The events in these nations generally transnational in nature, though the began in the spring of 2011, which targets of the revolutionaries were their led to the name. However, the political respective national governments. and social impact of these popular uprisings remains significant today,  The driving force behind the protests years after many of them ended. was a pan-Arabist anger against the old system. That’s why it spread like  When protests broke out in Tunisia wildfire from Tunis to Cairo, in late 2010 and spread to other Benghazi and Manama. countries, there were hopes that the Arab world was in for massive  They may have failed to reshape the changes. Arab political order, but the embers of the uprisings appear to have survived  The expectation was that in countries the tragedy of ‘Arab Spring’. where people rose, such as Tunisia, Egypt, Yemen, Libya, Bahrain and

Easy to PICK161 - “UPSC Monthly Magazine”

Easy to PICK162 - “UPSC Monthly Magazine” National Technical Textiles Mission Syllabus subtopic: Government Policies research, export and skill and Interventions for Development in development in this sector. various sectors and Issues arising out of their Design and Implementation.  The Mission has four components to achieve these goals. Prelims and Mains focus: about the mission and its significance; about Component-l: Promoting both (i) technical textiles and their applications fundamental research at fibre level and (ii) application based research in geo-textiles, News: The Cabinet Committee on agro-textiles, medical textiles, mobile Economic Affairs (CCEA) approved the textiles and sports textiles and establishment of a National Technical development of bio-degradable technical Textiles Mission to help India position textiles. itself as a “global leader” in technical Component-II: Promotion and Market textiles. This includes increasing exports Development. of these “futuristic” segments of textiles by Component-III: Export promotion of over 40 per cent in the next two years. technical textiles and ensuring 10% average growth in exports per year upto What are technical textiles? 2023-24. An Export Promotion Council Technical textiles are products used for for Technical Textiles will be set up for functional purposes. They have various this purpose. applications, ranging from agriculture, Component-IV: Promoting technical roads, railway tracks, sportswear and education at higher engineering and health on the one end, to bullet-proof and technology levels related to technical fire-proof jackets, high-altitude combat textiles. gear and space applications on the other end of spectrum. Aim: The Mission will aim at an average growth rate of 15-20 per cent per Present scenario annum, taking the level of the domestic  India’s technical textiles segment is market size to $40-50 billion by the year 2024. The mission aims to do this through estimated at $16 billion — market development, market promotion, approximately 6 per cent of the global international technical collaborations, market for this segment. investment promotions and ‘Make in India’ initiatives.  The penetration-level of technical textiles is low in India, varying Other details between 5-10 per cent as opposed to a  Around Rs 1,000 crore of the outlay level of 30-70 per cent in developed countries. is earmarked for “fundamental” research aimed at “path breaking” About National Technical Textiles technological products in the fibres Mission space, as well as application-based  The Cabinet has approved a total research in segments like agro-textiles, medical textiles and mobile textiles. It outlay of Rs 1,480 crore for the will also be used towards the project, which will be implemented development of biodegradable over four years and aims to promote technical textiles.

Easy to PICK163 - “UPSC Monthly Magazine”  The government aims to enhance exports of technical textiles to Rs 20,000 crore by 2021-22 from approximately Rs 14,000 crore currently.  The Mission’s export promotion component also aims for a 10 per cent average growth in exports per year up to 2023-24.  The Mission will also aim at improving education, skill development and adequacy of human resources in the country, which the government feels is currently “not adequate to meet the technologically challenging and fast growing technical textiles segment”. Arrangements have been made for the skill development of 50,000 people in the technical textiles field. The target of the mission is to nullify the burden of this segment on the country’s trade deficit over the course of one year.  The Centre will focus on including the usage of technical textiles in “various” flagship missions and programmes of the country, like the Jal Jivan Mission, Swachh Bharat and Ayushman Bharat.  A directorate in the Ministry of Textiles will be made operational for the implementation of this mission, but will move into a sunset phase after four years.

Easy to PICK164 - “UPSC Monthly Magazine” Cabinet approves Surrogacy (Regulation) Bill, 2020 Syllabus subtopic: Government Policies also included deleting the definition and Interventions for Development in of “infertility” as the inability to various sectors and Issues arising out of conceive after five years of their Design and Implementation. unprotected intercourse on the ground Prelims and Mains focus: about the Bill: that it was too long a period for a aim and significance; about surrogacy in India couple to wait for a child. News: The Union Cabinet has approved the Surrogacy (Regulation) Bill, 2020. Only Indian couples can opt for surrogacy in India Details of the Bill  Aim: The Bill is aimed at banning commercial surrogacy and allowing altruistic surrogacy.  The Bill proposes to regulate surrogacy by establishing a National Surrogacy Board and State Surrogacy Boards and appropriate authorities in the States and Union Territories respectively.  The proposed insurance cover for a surrogate mother has now been increased to 36 months from 16 months earlier.  The Bill allows a “willing” woman to be a surrogate mother and it will benefit widows and divorced women besides infertile Indian couples.  The Cabinet approved the Surrogacy (Regulation) Bill after incorporating the recommendations of a Rajya Sabha Select Committee.  The 15 major changes suggested by the 23-member committee to the Surrogacy (Regulation) Bill, 2019,

Easy to PICK165 - “UPSC Monthly Magazine” India-Myanmar Syllabus subtopic: India and its capacity development work in the Neighborhood- Relations. form of small projects which yield quick beneficial results for the local Prelims and Mains focus: about the people. details of the agreement signed; about India-Myanmar relations  On the side of governance, India will help Myanmar with the project of e- News: The visiting Myanmar President U ID cards, which is modelled after the Win Myint had a meeting with PM Modi Aadhaar project. on important bilateral issues. The two sides signed 10 agreements with a focus  The two sides decided to provide more on socioeconomic development of projects to Rakhine State Myanmar. Development Programme. India had committed $25 million grant Key takeaways from the meeting assistance to Myanmar over a period Some of the major takeaways are of five years and phase-I involved 1. Bus service between Manipur’s Imphal completion of 250 prefabricated house in Rakhine State. and Myanmar’s Mandalay,  The two sides also expressed 2. more Rakhine state development commitment to continue negotiations programme projects, on various pending treaties like Mutual Legal Assistance Treaty and 3. medical radiation equipment for Extradition Treaty. treatment of cancer patients,  India will also support establishment of 4. cooperation on petroleum, including in Myanmar’s diplomatic academy, and refinery, stockpiling, blending and retail. extend National Knowledge Network Details of the agreements signed to Myanmar.  India’s assistance in the construction of  They also reiterated Indo-Pacific Integrated Check Point at Tamu, Myanmar, bordering Manipur, will concept, as both sides agreed to work also be done. For ease of people-to- people movement across the border at together to promote principles of Moreh Tamu, the two countries signed the Land Border Crossing openness, inclusiveness, Agreement in 2018, which allowed bona fide travellers with valid transparency, respect for international document to cross the border at two international points of entry/exit: law and ASEAN centrality in Indo- Moreh-Tamu and Zokhawathar- Rih. Pacific.  They also decided to extend the Quick Impact Project schemes to  The agreements included an MoU on Myanmar. Under this, India takes up ‘Cooperation for Prevention of Trafficking in Persons; Rescue, Recovery, Repatriation and Re- Integration of Victims of Trafficking’.

Easy to PICK166 - “UPSC Monthly Magazine” India Myanmar Relations oil and natural gas reserves to meet India and Myanmar have traditionally had her energy requirements much in common, with cultural, historical, ethnic and religious ties, in addition to  Myanmar, a rapidly growing economy, sharing a long geographical land border offers significant opportunities for and maritime boundary in the Bay of trade in goods and services, Bengal. investment and project exports. Importance of Myanmar for India  Forums shared by both countries:  Cultural, historical, ethnic and ASEAN; BIMSTEC; Mekong Ganga Cooperation religious ties  In addition to a land border, both  To tackle insurgency in North-East – countries also share a long maritime “a large number of cross-border ethnic boundary in the strategically groups and insurgents from significant Andaman Sea and Bay of Northeast India have military bases Bengal where they face common in Myanmar challenges, which include not just a rising China but illegal fishing and  For Economic development of North- smuggling. East – Act east policy – Myanmar lies at tri-junction of east, southeast Kaladan Multi-Modal Transit and south Asia Transport Project The project will connect the seaport of  Strategically important to India as it Kolkata with Sittwe seaport in is the only ASEAN country that Myanmar by sea; it will then link Sittwe shares a border with India seaport to Lashio in Myanmar via Kaladan river boat route & then from  India is eying Myanmar’s abundant Lashio on to Mizoram in India by road transport.

Easy to PICK167 - “UPSC Monthly Magazine”  It will reduce distance from Kolkata to Mizoram by approximately 1000 km and cut travelling time to 3-4 days for transport of goods.  Significant in case of any conflict with China as present route i.e. chicken neck could be blocked by China in conflict situation.  The access to the sea that the project provides its Northeastern states could boost their economies.  It would strengthen India’s trade and transport links with Southeast Asia.  It will be instrumental in India’s “act-east policy”. India-Myanmar-Thailand trilateral highway India’s renewed commitment to complete the 3,200-km India-Asean trilateral highway that extends from Moreh in India to Mae Sot in Thailand via Mandalay, Myanmar.

Easy to PICK168 - “UPSC Monthly Magazine” India to attend signing of US-Taliban peace deal Syllabus subtopic: Effect of Policies and India’s engagement with Taliban Politics of Developed and Developing  While India has never negotiated Countries on India’s interests with the Taliban — except during the Prelims and Mains focus: about US- IC-814 hijack in 1999 — it was part Taliban peace deal; its significance for of the Moscow-led talks with the India Taliban in November 2018, which two former Indian diplomats attended as News: In its first step towards engaging “non-official representatives”. with the Taliban, India has decided to send its envoy to the signing of the peace  Though some within the strategic pact between the US and Taliban in establishment have argued for Doha. engaging with the Taliban — who represent the new reality — the foreign Background policy establishment has so far shied On February 21, US Secretary of State away from doing so. With the new US- Mike Pompeo had said the US and Taliban Taliban deal, India has recalibrated its would sign a peace agreement on February position and taken the first step 29, at the end of a week-long period of towards engaging with the Taliban. reduction in violence in Afghanistan. Joint statement related to Aghanistan About the issue during Trump’s visit  India received an “invitation” from  Significantly, India’s concerns on Qatar, and after deliberations at the Afghanistan were “very well reflected” highest level, the government has in the joint statement issued during decided to send India’s Ambassador to Trump’s visit. Qatar.  The two sides agreed on a common  This is the first time that an official language, which was identical to representative will attend a India’s traditional position, and even ceremony where the Taliban talked about India’s role in representatives will be present. development and security assistance to When Taliban was in power between Afghanistan. Interestingly, while the 1996 and 2001, India did not recognise statement talks about Afghan-led and it diplomatically and officially. Afghan-owned peace process, it does not mention Afghan-controlled —  While the decision is not linked to US since the reality is that the process is President Donald Trump’s recent controlled by other players, visit to India, the signing of the pact including the US. will have strategic, security and political implications for India. The  India and the US share interest in a matter was discussed by PM Modi and united, sovereign, democratic, Trump during their bilateral meetings. inclusive, stable and prosperous Afghanistan. They support an Afghan- led and Afghan-owned peace and

Easy to PICK169 - “UPSC Monthly Magazine” reconciliation process that results in a  Apart from the US, India has been in sustainable peace; cessation of regular talks with other active violence; elimination of terrorist safe players like all political forces in havens; and preservation of the gains Afghanistan, Russia, Iran, Saudi of the last 18 years. President Trump Arabia and China on the issue. welcomed India’s role in continuing to provide development and security  While many western observers believe assistance to help stabilise and provide the agreement could represent a chance connectivity in Afghanistan,. for peace in the country, New Delhi has been more cautious as it gives  The last joint statement, issued during strength to Pakistan — a long-time Modi’s visit to the White House in benefactor of the Taliban. 2017, had said that Trump welcomed  Though India has softened its position on engaging with the further Indian contributions to promote Taliban, it has always maintained Afghanistan’s democracy, stability, that it has three red lines — which it spelt out when the US, Russia and prosperity and security. Recognising China were conducting their negotiations with the Taliban last year. the importance of their respective 1st red line strategic partnerships with  All initiatives and processes must Afghanistan, the leaders committed to include all sections of the Afghan society, including the legitimately continue close consultations and elected government. This is important as, in the past, the Afghan government cooperation in support of has often been sidelined by Afghanistan’s future. international interlocutors when they engaged with the Taliban. This also Significance to US-Taliban deal for means that there is acceptability in India Delhi about talking to the Taliban —  For New Delhi, the US-Taliban deal since they represent a “section of the Afghan society”. holds significance given that the return of Taliban in Afghanistan has  What happens to the Ashraf Ghani harsh memories from the 1990s, government — which just got re- especially the IC-814 hijack, which elected — will be something that led to the release of terrorist Masood Delhi will watch. India, under Modi, Azhar. Azhar later founded the Jaish- has developed a close relationship with e-Mohammed, responsible for several Ghani, and has been on the same side terrorist attacks, including the attack of the argument regarding Pakistan- on Parliament in 2001 and the sponsored terrorism. Pulwama attack in 2019. 2nd red line  New Delhi has kept a close watch Any process should respect the while the US and Taliban negotiators constitutional legacy and political have been meeting for the last two mandate. This means that the achievement years. It has been briefed by the US interlocutors, especially US special envoy Zalmay Khalilzad who has travelled to India several times and met External Affairs Minister at the Munich Security Conference recently.

Easy to PICK170 - “UPSC Monthly Magazine” of establishing democratic processes and human rights, including women’s rights, should be respected. Delhi will again monitor whether the “new Taliban” — as many Western interlocutors claim — will respect these achievements over the last two decades. 3rd red line Any process should not lead to any ungoverned spaces where terrorist and their proxies can relocate. This is crucial for India, as it points out the threat from terrorist groups including the Haqqani network, Al Qaeda and Islamic State, which must not be allowed to operate there. Also, Pakistan-based terrorist groups like the Lashkar-e-Taiba, Jamaat-ud-Dawa and Jaish-e-Mohammed must not be allowed to relocate. These “red lines” are India’s mantras, even as it pushes for a national peace and reconciliation process which is Afghan- led, Afghan-owned and Afghan-controlled. In short, India’s approach has been to counter the Pakistan military establishment’s influence over Kabul.

Easy to PICK171 - “UPSC Monthly Magazine” UK threatens to pull out of EU trade talks Syllabus subtopic: Effect of Policies and Concerns of EU regarding Britain’s Politics of Developed and Developing demands Countries on India’s interests  Brussels says Britain’s geographical Prelims and Mains focus: about Brexit; proximity and existing close ties the transition deal; conflicting issues make it a different case, fearing it between UK and EU regarding its implementation could gain an uncompetitive advantage by relaxing costly environmental and labour laws. News: Britain put the prospect of a chaotic  It says Britain must mirror EU Brexit back on the table as it set out its standards if it wants to continue red lines for trade talks with the freely trading goods with the bloc’s European Union. huge single market. However, Mr. Johnson argues this would undermine Background the whole point of Brexit, even if that Britain left the EU on January 31, but means increased barriers with what is both sides agreed to a standstill currently Britain’s largest trading transition period lasting until December partner. 31 to allow time to strike a new partnership.  Brussels also wants its state aid rules to apply in the U.K. — something About the issue London rejects.  In its mandate for the negotiations that Regarding Financial Services start on March 2nd, Prime Minister  Another potential flashpoint is Boris Johnson’s government rebuffed EU demands for common trading financial services, a key concern for standards and continued fishing Britain that it wants resolved by June rights. to allow firms to keep working in the EU after December 31.  And it warned it could walk away from the talks if a “broad outline” of  The European Commission refused a deal is not agreed by a meeting to commit the EU to completing so- planned for June. called equivalence assessments by June. Likely consequences This would see Britain’s currently Other conflicting issues seamless trading arrangements with the  One crucial issue for both sides in the EU, forged over half a century, abruptly end after a post-Brexit transition period upcoming negotiations is fishing expires in December. rights. Demands of UK govt.  But it is also vital for many EU UK wants a free trade agreement similar countries, notably France, where fish to the EU’s deal with Canada, set and seafood caught in U.K. waters alongside separate agreements on issues account 30% of sales for fishermen. such as fishing, energy and aviation.

Easy to PICK172 - “UPSC Monthly Magazine”  Brussels wants to maintain the right of its fleets to fish in U.K. waters, warning that failure to agree on this could scupper the wider trade talks. But Britain said it will take back control of its waters as an independent coastal State and it will not link access to its waters to access to EU markets.  London proposes instead that fishing opportunities be negotiated annually, based on stock levels. The European Commission, which is negotiating on behalf of the EU’s 27 member states, said it was preparing for all scenarios.

Easy to PICK173 - “UPSC Monthly Magazine” ADR report on donation to political parties Syllabus subtopic: Background  Salient Features of the Representation  The recognised national political of People’s Act. parties — the BJP, the Congress, the  the Role of NGOs, SHGs, various Trinamool Congress, the Communist Party of India (CPI), the Communist groups and associations, donors, Part of India (Marxist), the charities, institutional and other Nationalist Congress Party (NCP) stakeholders. and the Bahujan Samaj Party (BSP) — were supposed to submit details of Prelims and Mains focus: about the all contributions over Rs.20,000, report and its key findings regarding received by September 30, 2019. donations received by national parties  The national parties declared a total of News: Association for Democratic Rs.951.66 crore in such donations in Reforms (ADR) in its report analysed 2018-19 and much of the amount — submissions made by the parties before the Rs.742.15 crore — was declared by the Election Commission (EC) regarding BJP. donations received by them. Key findings of the report CPI(M) 21 days and the CPI three days.  The Bhartiya Janta Party (BJP) received three times more donations  The BSP declared that the party did not over Rs.20,000 than all other receive any donations above Rs.20,000 national political parties combined during FY 2018-19, as it has been in 2018-19. declaring for the past 13 years.  The ADR report noted that the BJP  Compared to the previous financial was 31 days late in its submission, the year 2017-18, the national parties’

Easy to PICK174 - “UPSC Monthly Magazine” declared donations increased by background of the candidates 103% in 2018-19, which was an contesting elections. Based on this, election year. Donations to the BJP the Supreme Court in 2002, and increased from Rs.437.04 crore in subsequently in 2003, made it 2017-18 to Rs.742.15 crore in 2018-19 mandatory for all candidates and those to the Congress increased contesting elections to disclose from Rs.26.658 crore to Rs.148.58 criminal, financial and educational crore. background prior to the polls by filing an affidavit with the Election  The ADR found that the bulk of Commission. donations to the parties came from Maharashtra among States and  The first election watch was corporate or business sectors when conducted by ADR in 2002 for looking at the category of donors. Gujarat Assembly Elections whereby The national parties received a total of detailed analysis of the backgrounds of Rs.548.22 crore from donors in candidates contesting elections was Maharashtra, followed by Rs.141.42 provided to the electorate in order to crore from Delhi and Rs.55.31 crore help the electorate make an informed from Gujarat. choice during polls. Since then ADR has conducted Election Watches for  Over 92% of the total donations, almost all state and parliament worth Rs.876.11 crore, came from elections in collaboration with the the corporate or business sector, National Election Watch. It conducts while 3,509 individual donors gave multiple projects aimed at increasing Rs.71.407 crore or 7.5% of the total. transparency and accountability in the Out of the 1,776 donations made by political and electoral system of the corporate or business sector, the BJP country. received 1,575 donations totalling Rs.698.092 crore. The Congress got Mission Rs.122.5 crore from 122 donations Its goal is to improve governance and from the corporate or business sector. strengthen democracy by continuous work in the area of Electoral and Political  The top donor was the Tata Group- Reforms. The ambit and scope of work in controlled Progressive Electoral Trust, this field is enormous, Hence, ADR has which gave a total of Rs.455.15 crore chosen to concentrate its efforts in the to the BJP, the Congress, and the following areas pertaining to the political Trinamool. system of the country:  Corruption and criminalization in the About Association for Democratic Reforms (ADR) political process.  The Association for Democratic  Empowerment of the electorate Reforms (ADR) was established in through greater dissemination of 1999 by a group of professors from information relating to the candidates the Indian Institute of Management and the parties, for a better and (IIM) Ahmedabad. In 1999, Public informed choice. Interest Litigation (PIL) was filed by  Need for greater accountability of them with Delhi High Court asking for Political Parties. [or requesting] the disclosure of the  Need for inner-party democracy and criminal, financial and educational transparency in party-functioning.

Easy to PICK175 - “UPSC Monthly Magazine” Marathi to be compulsory in all Maharashtra schools Syllabus subtopic: Government Policies  The subject will be, thus, taught from and Interventions for Development in Class I to Class X from 2024, and the various sectors and Issues arising out of schools will follow a curriculum their Design and Implementation. prescribed by the government. Prelims and Mains focus: about the bill  The government will have the power and its significance; concerns raised by the to exempt a student or a class of opposition students from all or any of the provisions of the Bill. News: The Maharashtra Assembly unanimously passed the Maharashtra  The Bill also provides for a penalty of Compulsory Teaching and Learning of Rs.1 lakh for non-compliance. Marathi Language in Schools Bill, 2020 Objection on provision of exemption Background  The Opposition said it will create a The development came on Marathi Bhasha Din (Marathi language day) loophole. The penalty of Rs.1 lakh is which is celebrated on February 27, the too low. Several schools charge fees birth anniversary of poet and Jnanpith ranging from Rs.5 lakh to Rs.12 lakh. award winner late V.V. Shirwadkar. Paying Rs.1 lakh would not be a problem for them. There is also no Key highlights of the Bill Marathi a provision for penalising repeat  The Bill makes across all offenders. compulsory subject  The govt said that the exemption schools in the State. clause is for students coming from outside Maharashtra giving example  The legislation was on the lines of of someone from outside the State laws in Telangana, Tamil Nadu, taking admission in Maharashtra in Kerala and Karnataka, and it makes Class VII. The exemption was meant teaching and studying Marathi for such students as they would not be compulsory in all schools able to catch up with local students (irrespective of the board to which who would be studying the subject they are affiliated). from the Class I.  Marathi will become a compulsory subject in all schools from Class I to Class X in a phased manner from the academic year 2020-2021.  It will be introduced in Class I and Class VI from the coming academic year and extended to further classes in subsequent years.

Easy to PICK176 - “UPSC Monthly Magazine” National Pharmaceutical Pricing Authority (NPPA) Syllabus subtopic: Statutory, Regulatory new process developed indigenously and various Quasi-judicial Bodies. and patented. Prelims and Mains focus: about the Drug Price Control Orders decision; about drug prices control order;  The NPPA regularly publishes lists of about NPPA and its functions medicines and their maximum ceiling News: The National Pharmaceutical prices. The latest DPCO was released Pricing Authority (NPPA) has decided to in 2013 which has a list of 384 drugs. exempt a new stent made by Meril Life Sciences from price control, several  On 4 December 2017, it was months after a patient activist group raised announced that a Multi-disciplinary safety concerns about the product. committee of experts for consultation on matters pertaining to Background implementation of Drug Price Control  The decision comes nearly three years Order (DPCO) including technicalities involved in pricing and new launches after the drug pricing regulator had will be setup and it will have the capped the prices of these products member secretary of the National “in public interest”. Pharmaceutical Pricing authority (NPPA) as its convener.  NPPA, in 2017, had slashed the ceiling prices of stents by up to 85 per cent. About NPPA  The National Pharmaceutical Pricing About the decision  The authority deliberated upon the Authority (NPPA) is a government regulatory agency that controls the matter “at length” and observed that prices of pharmaceutical drugs in establishing significant therapeutic India. advantage and increased efficacy “is not a pre-requisite for obtaining  NPPA was constituted vide exemption under para 32(ii) of DPCO Government of India Resolution dated 2013.” 29th August, 1997 as an attached office of the Department of  Para 32 of the Drugs (Prices Pharmaceuticals (DoP), Ministry of Control) Order, 2013 lists out certain Chemicals & Fertilizers as an conditions a product has to meet to independent Regulator for pricing of stay out of the provisions of the drugs and to ensure availability and regulation. accessibility of medicines at affordable prices.  This includes new drugs developed through indigenous research and Functions development that are patented under 1. To implement and enforce the the Indian Patent Act, 1970 and not produced elsewhere as well as new provisions of the Drugs (Prices drugs produced in the country by a Control) Order in accordance with the powers delegated to it.

Easy to PICK177 - “UPSC Monthly Magazine” 2. To deal with all legal matters arising out of the decisions of the Authority. 3. To monitor the availability of drugs, identify shortages, if any, and to take remedial steps. 4. To collect/ maintain data on production, exports and imports, market share of individual companies, profitability of companies etc, for bulk drugs and formulations. 5. To undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals. 6. To recruit/ appoint the officers and other staff members of the Authority, as per rules and procedures laid down by the Government. 7. To render advice to the Central Government on changes/ revisions in the drug policy. 8. To render assistance to the Central Government in the parliamentary matters relating to the drug pricing

Easy to PICK178 - “UPSC Monthly Magazine” China-Pakistan Economic Corridor Syllabus subtopic: Effect of Policies and Initiative (BRI) which is aimed at Politics of Developed and Developing furthering China’s global influence Countries on India’s interests with infrastructure projects funded Prelims and Mains focus: about CPEC by Chinese investments all over the and India’s concerns; about China’s Belt world. and Road Initiative  China has committed to invest over News: In an interesting move, cash- USD 60 billion in Pakistan as part of strapped Pakistan has invited the US to the CPEC under which it planned to join the China-Pakistan Economic build a number of special economic Corridor (CPEC), an ambitious zones. infrastructure project looked with  CPEC's potential impact on Pakistan suspicion by the Trump administration has been compared to that of the for being non-transparent. Marshall Plan undertaken by the United States in post-war Europe. About CPEC Pakistani officials predict that CPEC  CPEC connecting China’s Xinjiang will result in the creation of upwards of 2.3 million jobs between 2015–2030, with Pakistan’s Gwadar port is and add 2 to 2.5 percentage points to regarded as the flagship project of the the country's annual economic growth. multi-billion dollar Belt and Road

Easy to PICK179 - “UPSC Monthly Magazine” India’s objections to CPEC 2. Encirclement fears: India has alleged 1. Sovereignty claims: India objects to that China and Pakistan intended to the CPEC project as upgrade works to develop the corridor not just for its the Karakoram Highway are taking economic benefits, but also is place in Gilgit Baltistan in Pakistan- occupied Kashmir; territory that India motivated by the \"strategic intent of claims as its own. besieging India.”

Easy to PICK180 - “UPSC Monthly Magazine” Economic Survey on India’s economic growth Syllabus subtopic: Indian Economy and 21 from the estimated 4.8% in the issues relating to Planning, Mobilization of preceding year, after sharply paring its Resources, Growth, Development and earlier projections “owing to stress in Employment. the non-bank financial sector and Prelims and Mains focus: about the weak rural income growth\". suggestions and observations made in the  The Economic Survey said its own survey related to India’s economic growth projection is fraught with downside News: The Economic Survey, authored risks such as continued global trade by the Chief Economic Adviser (CEA), tensions, worsening US-Iran said that the government must use its geopolitical situation, increase in short- strong mandate to deliver expeditiously on term interest rates in advanced reforms which will enable the economy to economies, slow progress in strongly rebound in 2020-21. implementation of the insolvency and bankruptcy code, and stagnation in Background gross domestic savings rate.  Earlier this month, the International  The overarching theme of the survey this year is wealth creation and the Monetary Fund projected India’s policy choices that enable this. growth to accelerate to 5.8% in 2020- Observations made in the survey activities, especially ‘network  China’s remarkable export products’, where production occurs performance vis-à-vis India is driven across global value chains operated by primarily by deliberate specialization multinational corporations. at large scale in labour-intensive

Easy to PICK181 - “UPSC Monthly Magazine”  The government intervention hurts  Upside risks, such as bottoming out of more than it helps in the efficient global trade, a turnaround in housing, functioning of markets. Giving the favourable global sentiment toward example of the pharmaceutical India, and better implementation of the industry, the survey said government goods and services tax, are expected to interventions often lead to unintended boost economic growth. consequences such as price increases, when compared to markets that are 14. growth in merchandize exports, unregulated. 15. higher build-up of foreign exchange  The survey said the economy is set to reserves, and revive in the second half of 2019-20 16. positive growth rate of GST revenue mainly on account of ten positive factors. It listed them as: collection.  It proposed a new programme, 1. picking up of Nifty (National Stock Exchange’s Nifty index) for the first “Assemble in India\", to be time this year, integrated with “Make In India\" and focusing on labour-intensive exports 2. an upbeat secondary market, that could potentially create 40 3. higher foreign direct investment million well-paid jobs by 2025 and 80 million by 2030. inflows,  India’s aspiration to become a $5- 4. build-up of demand pressure, trillion economy, depends critically 5. positive outlook for rural consumption, on strengthening the invisible hand 6. rebound of industrial activity, of markets together with the hand of 7. steady improvement in manufacturing, trust that can support markets. The 8. growth in merchandize exports, invisible hand needs to be strengthened 9. higher build-up of foreign exchange by promoting pro-business policies to a) provide equal opportunities for new reserves, and entrants, enable fair competition and 10. positive growth rate of GST revenue ease doing business, b) eliminate policies that undermine collection. markets through government 11. growth in merchandize exports, intervention even where it is not 12. higher build-up of foreign exchange necessary, c) enable trade for job creation, and reserves, and d) efficiently scale up the banking sector 13. positive growth rate of GST revenue to be proportionate to the size of the Indian economy. collection. Way ahead Suggestions given in the Survey The survey’s projected FY21 growth of  Reducing spending on subsidies, 6-6.5% may prove to be optimistic unless backed by a strong fiscal stimulus in the especially on food, to create fiscal budget and the meeting of investment space for additional spending in areas targets specified in the National such as infrastructure development. Infrastructure Pipeline, both by the central and state governments.  Reforms in land and labour markets may further reduce business costs. As the proportion of small and marginal holdings is significantly large, land reform measures like freeing up land markets can help farmers in improving their income.

Easy to PICK182 - “UPSC Monthly Magazine” Economic Survey on entrepreneurship Syllabus subtopic: Indian Economy and  The data showed that new firm issues relating to Planning, Mobilization of creation in services sector (at around Resources, Growth, Development and 85,000) was significantly higher than Employment. that in manufacturing (a little less that 15,000), infrastructure (about Prelims and Mains focus: about the 5,000) or agriculture (less than remarks made in the survey regarding 5,000). entrepreneurship  The entrepreneurship at the bottom of News: The Economic Survey said that the administrative pyramid — a district India currently ranks third globally in the number of new firms created with — had a significant impact on wealth about 1.24 lakh new entities coming up in creation at the grassroots level. “... a 2018. 10% increase in registration of new Entrepreneurship scenario in India  As per the Survey, new firm creation firms in a district yields a 1.8% had gone up dramatically since 2014. increase in GDDP (gross district  While the number of new firms in the domestic product). Thus, formal sector grew at a cumulative annual growth rate of 3.8% from 2006 entrepreneurship at the bottom of to 2014, the growth rate from 2014 to the administrative pyramid — a 2018 had been 12.2%. As a result, from about 70,000 new firms created district — has a significant impact in 2014, the number has grown by about 80% to about 1,24,000 new on wealth creation at the grassroots firms in 2018. level.  However, on a per-capita basis, India had low rates of entrepreneurship in  Enhancing ease of doing business the formal economy. Between the 10- and implementing flexible labour year period from 2006 to 2016, the laws in job-creating sectors, such as mean number of new firms registered manufacturing, can create the per year per 1,000 workers was 0.10. maximum number of jobs in districts In contrast, the mean entrepreneurial and thereby, in the States. intensity for the U.K. and the U.S. was 12.22 and 12.12, respectively.  Literacy, education and physical infrastructure are the other policy  The Survey also pointed out that in levers that district and State contrast to the other countries, a administrations must focus upon to large number of India’s enterprises foster entrepreneurship and thereby, operate in the informal economy job creation and wealth creation. which was not captured in the data.

Easy to PICK183 - “UPSC Monthly Magazine” Economic Survey on Privatisation Syllabus subtopic: Indian Economy and privatised CPSEs have been able to issues relating to Planning, Mobilization of generate more wealth from the same Resources, Growth, Development and resources.The analysis clearly affirms Employment. privatisation unlocks the potential of Prelims and Mains focus: about the CPSEs to create wealth. suggestions/observations made in the survey regarding disinvestment of CPSEs  Interestingly, according to the News: The Economic Survey has government document, the recent aggressively pitched for divestment in approval of strategic disinvestment in public sector undertakings (PSUs) Bharat Petroleum Corporation Limited (BPCL) led to an increase in value of Observations and suggestions made in shareholders’ equity of BPCL by the survey ₹33,000 crore compared to its peer  The government can transfer its stake Hindustan Petroleum Corporation Limited. in listed CPSEs to a separate corporate entity. This entity would be  Aggressive disinvestment, preferably managed by an independent board through the route of strategic sale, and would be mandated to divest the should be utilised to bring in higher government stake in these CPSEs profitability, promote efficiency, over a period of time. increase competitiveness and to promote professionalism in  This will lend professionalism and management in CPSEs. autonomy to the disinvestment programme which, in turn, would  The focus of the strategic improve the economic performance disinvestment needs to be to exit from of the CPSEs. non-strategic business and directed towards optimising economic potential  The survey analysed the data of 11 of these CPSEs, it added, highlighting PSUs that had been divested from there were about 264 CPSEs under 38 1999-2000 and 2003-04 and compared Ministries or departments. the data with their peers in the same industry.  Analysis shows that these privatised CPSEs, on an average, performed better post-privatisation than their peers in terms of their net worth, net profit, return on assets (ROA), return on equity (RoE), gross revenue, net profit margin, sales growth and gross profit per employee.  More importantly, the ROA and net profit margin turned around from negative to positive, surpassing that of peer firms, which indicates that

Easy to PICK184 - “UPSC Monthly Magazine” Anti-dumping duty Syllabus subtopic: Effects of exporting the material — purified Liberalization on the Economy, Changes terephthalic acid (PTA) — to India. in Industrial Policy and their Effects on Industrial Growth. Reason for abolishing anti-dumping duty Prelims and Mains focus: about the move  As PTA is a raw material for many to abolish duties and its significance; about dumping industries, there has been a persistent demand that they should be allowed to News: The government’s decision to source it at an affordable rate, even if it abolish anti-dumping duties on Purified means importing it. Terephthalic Acid (PTA) will bring down manufacturing cost and  The duties had led to downstream potentially boost exports. manufacturers of synthetic fabrics operating at only 70 per cent of their Background actual capacity.  The anti-dumping duties, first  While India has a few domestic PTA imposed around July 2014, levied producers like Reliance Industries and additional charges between $27 to the Indian Oil Corporation, synthetic $160 per metric tonne for those fabric makers have faced shortages wishing to import PTA. of PTA on several occasions.  Data from the Commerce Ministry What is PTA used for? shows exports of some products made  It is a raw material for synthetic with PTA like polyester staple fibres (used to make synthetic yarn) dropped fibre-based clothing and certain over 35 per cent to $197 million in plastic-based products. 2015-16 from $309 million in 2013-14.  It also follows “persistent” demand  In 2018-19, India exported $320 “for quite some time” from several million worth of this product. Exports industries to allow them to source the of textured yarn of polyesters dropped product at a more affordable rate. 19 per cent to around $680 million in 2015-16 from around $842 million Significance of the move 2013-14, before growing to around  Easy availability of PTA at $832 million last financial year. competitive prices was desirable to About the move unlock immense potential in the  The move, announced in the Budget, textile sector, seen as a significant employment generator. does away with a previous NDA government decision to block  This removal of the anti-dumpting duty countries like China, Taiwan, would greatly help the country to Malaysia, Indonesia, Iran, Korea and enhance global competitiveness, Thailand from substantially boost exports and enable domestic manufacturers to compete with cheaper imports.

Easy to PICK185 - “UPSC Monthly Magazine” What is dumping?  Dumping is a term used in the context of international trade. It's when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter's domestic market.  Because dumping typically involves substantial export volumes of a product, it often endangers the financial viability of the product's manufacturers or producers in the importing nation. What Is an Anti-Dumping Duty? An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. For protection, many countries impose stiff duties on products they believe are being dumped in their national market, undercutting local businesses and markets.

Easy to PICK186 - “UPSC Monthly Magazine” Commission for Agricultural Costs and Price (CACP) Syllabus subtopic: Issues related to Direct About Commission for Agricultural and Indirect Farm Subsidies and Minimum Costs and Price (CACP) Support Prices  It is an attached office of the Ministry Prelims and Mains focus: about the of Agriculture and Farmers Welfare, open-ended procurement policy and the Government of India. need to review it; about CACP and its mandate  It came into existence in January 1965. News: As the debate surrounding the review of open-ended procurement Composition policy has started gaining momentum, Currently, the Commission comprises a following a recommendation by the Chairman, Member Secretary, one Commission for Agricultural Costs and Member (Official) and two Members Price (CACP) to the Centre government, (Non-Official). The non-official members several farmers and farmers’ bodies in are representatives of the farming Punjab and Haryana have hinted that community and usually have an active any move to stop or limit it would be association with the farming community. opposed and resisted. Mandate Background  To recommend minimum support According to CACP, the policy of open- ended procurement has led to mounting prices (MSPs) to incentivize the food stocks and adversely affected crop cultivators to adopt modern diversification. Consequently, it asked for technology, and raise productivity and a review of the open-ended policy. overall grain production in line with the emerging demand patterns in the What is the open-ended procurement country. Assurance of a policy? remunerative and stable price  Under it, government agencies buy environment is considered very important for increasing whatever quantity of wheat and rice agricultural production and is brought by farmers into the productivity since the market place mandis (wholesale markets), within for agricultural produce tends to be the stipulated time and which inherently unstable, which often inflict conforms to fixed quality undue losses on the growers, even parameters for Central pool. when they adopt the best available technology package and produce  The open-ended procurement policy is efficiently. Towards this end, MSP for an integral part of the agricultural major agricultural products are price support policy for the two most fixed by the government, each year, important cereals: rice and wheat. A after taking into account the review of it will constitute an recommendations of the examination of its basic structure. Commission.

Easy to PICK187 - “UPSC Monthly Magazine”  As of now, CACP recommends  The government, in turn, circulates MSPs of 23 commodities, which the CACP reports to state comprise 7 cereals (paddy, wheat, governments and concerned central maize, sorghum, pearl millet, barley Ministries for their comments. After and ragi), 5 pulses (gram, tur, moong, receiving the feed-back from them, the urad, lentil), 7 oilseeds (groundnut, Cabinet Committee on Economic rapeseed-mustard, soyabean, seasmum, Affairs (CCEA) of the Union sunflower, safflower, nigerseed), and 4 government takes a final decision on commercial crops (copra, sugarcane, the level of MSPs and other cotton and raw jute). recommendations made by CACP. How is MSP decided by the  Once this decision is taken, CACP puts government? all its reports on the web site for  CACP submits its recommendations various stakeholders to see the rationale behind CACP's price and to the government in the form of non-price recommendations. Price Policy Reports every year, separately for five groups of commodities namely Kharif crops, Rabi crops, Sugarcane, Raw Jute and Copra.  Before preparing aforesaid five pricing policy reports, the Commission draws a comprehensive questionnaire, and sends it to all the state governments and concerned National organizations and Ministries to seek their views. Subsequently, separate meetings are also held with farmers from different states, state governments, National organizations like FCI, NAFED, Cotton Corporation of India (CCI), Jute Corporation of India (JCI), trader's organizations, processing organizations, and key central Ministries.  The Commission also makes visits to states for on-the-spot assessment of the various constraints that farmers face in marketing their produce, or even raising the productivity levels of their crops.  Based on all these inputs, the Commission then finalizes its recommendations/reports, which are then submitted to the government.

Easy to PICK188 - “UPSC Monthly Magazine” Kerala islands under CRZ regime Syllabus subtopic: Conservation,  Till the 2019 notification comes into Environmental Pollution and Degradation, effect, the 2011 notification will hold Environmental Impact Assessment. good. Prelims and Mains focus: about the CRZ What is the CRZ area? regime and its significance  No new development activity will be News: As many as 2,130 backwater permitted in these islands in an area islands of Kerala, including Maradu, have between High Tide Line (HTL) and been brought under the Coastal 50 metres towards the landward Regulation Zone (CRZ) regime thereby side, which is the CRZ area of these imposing curbs on development islands. activities.  The HTL is the line on the land up to Background which the highest water line reaches The provisions of the CRZ 2011 during the spring tide. notification made special provisions for Kerala considering the unique coastal Islands on the CRZ list systems of backwaters and backwaters  The islands of Mulavukad, islands along with the space limitation in the coastal stretches of the State of Kerala. Chendamangalam, Kothad, Pizhala and Kadamakudy of Ernakulam where CRZ 2011 notification some major CRZ violations have been  Within the 50 metre CRZ area of reported are there in the list of 1,068 islands of the district. these islands, only the repair and reconstruction of existing dwelling  The 474 islands of Alappuzha and the units of local communities will be 184 of Kollam are also in the list. permitted. Thiruvananthapuram has the least number of islands, 43.  Beyond the 50 metre limit, the local communities could construct new  This is for the first time that the list dwelling units with the permission of of the Kerala islands is being drawn the local body. up. Changes made by CRZ 2019 notification  The list of the islands was prepared  The CRZ area of these islands has been by the National Centre for Earth reduced to 20 metres in the subsequent CRZ notification issued in Science Studies, 2019, allowing more land for construction towards the water Thiruvananthapruam, for the Kerala body. One may have to wait for some more time for availing of the benefits Coastal Zone Management Authority of the CRZ 2019 notification, as it is yet to come into force. (KCZMA).

Easy to PICK189 - “UPSC Monthly Magazine” Foreign Portfolio Investors ( FPIs) Syllabus subtopic: paid to a person residing outside  Effects of Liberalization on the that country. The withholding tax was so far allowed only until July 2020, Economy, Changes in Industrial Policy which has been extended to July 2023. and their Effects on Industrial Growth. The amendments are effective from the  Government Budgeting. next fiscal. Prelims and Mains focus: About steps  For investments made by FPIs in bond taken to boost private investment; market instruments such as associated terms and their meaning government securities, corporate bonds, municipal bonds, the News: Finance minister took several government has set the withholding tax measures to woo foreign portfolio rate at 5%. In its absence, the tax investors (FPIs) after the misstep last year would have depended on double on imposing a surcharge on investors taxation avoidance agreement or tax which were registered as a trust. treaties so could go up to 15%. Under the treaty, the tax outgo is capped at What are steps to be taken? 15% for the US. 1. withholding tax rate of 5% for FPIs About Sovereign wealth fund investing in the bond market  A sovereign wealth fund is a state- 2. eliminating the dividend distribution owned investment fund that is used to tax (DDT) benefit the country's economy and 3. letting FPIs claim credit in home citizens. jurisdiction  Funding comes from central bank 4. Full tax exemption for sovereign reserves, currency operations, privatizations, transfer payments, and wealth funds if they invest in revenue from exporting natural infrastructure and other notified resources. priority sectors. The sectors include roads, highway projects, ports and  Funds tend to prefer returns over water supply projects. liquidity and are therefore more risk- tolerant than traditional foreign Significance of the move exchange reserves.  The steps showcase how the  Acceptable investments in each SWF government is seeking to tap private vary from country to country. capital, especially foreign funds, to revive economic growth at a time  Sovereign wealth funds such as Abu when the government’s balance sheet Dhabi Investment Authority and is stretched. Singapore’s GIC have invested billions of dollars in India, especially in  The Centre tried to pull all stops in infrastructure and energy sectors. They reaching out to foreign investors in the are considered as patient investors with budget. About Withholding tax  Withholding tax is deducted at source, and is levied by some countries on interest or dividends

Easy to PICK190 - “UPSC Monthly Magazine” extremely deep pockets and very long-  The biggest beneficiary of term investment horizons. eliminating DDT are foreign funds, as they won’t just pay tax as per rates About Dividend Distribution Tax (DDT) negotiated under various treaties but  DDT is a tax levied on dividends that can also claim credit in their home jurisdictions on tax outgo in India. a company pays to its shareholders out of its profits. What Is Foreign Portfolio Investment (FPI)?  It is taxable at source, and is  FPI consists of securities and other deducted at the time of the company distributing dividends. financial assets held by investors in another country.  The dividend is the part of profits that the company shares with its  It does not provide the investor with shareholders. direct ownership of a company's assets and is relatively liquid  The law provides for the DDT to be depending on the volatility of the levied at the hands of the company, market. and not at the hands of the receiving shareholder. However, an additional  Along with foreign direct investment tax is imposed on the shareholder, who (FDI), FPI is one of the common ways receives over Rs. 10 lakh in dividend to invest in an overseas economy. FDI income in a financial year. and FPI are both important sources of funding for most economies. Pros Cons Feasible for retail investors No direct control/management of investments Quicker return on investment Volatile Highly liquid Cause of economic disruption (if withdrawn)

Easy to PICK191 - “UPSC Monthly Magazine” National Logistics Policy Syllabus subtopic: Food Processing and infrastructure. According to the draft Related Industries in India- Scope’ and policy, the Logistics Wing will “work Significance, Location, Upstream and with the ministries of food Downstream Requirements, Supply Chain processing industries, consumer Management. affairs, food & public distribution and the department of horticulture Prelims and Mains focus: about the draft in respective states to identify key national logistics policy: benefits and policy interventions and infrastructure challenges in implementation enhancement to promote penetration of cold chain facilities and adoption of News: In her Union budget speech, the reefer (refrigerator) trucks in strategic finance minister said the government will locations.\" release the policy soon. Benefits of the policy Background  The upcoming national logistics policy  India’s logistics sector has remained is expected to streamline rules and fragmented and unregulated, despite address supply-side constraints, its centrality to economic growth. leading to lower logistics costs and According to a logistics policy draft greater competitiveness for Indian released by the commerce ministry products worldwide. in February 2019, the government will create a single point of reference  The national logistics policy will for all logistics and trade facilitation clarify the roles of the Union matters, reducing logistics costs, which government, state governments and are now estimated at 13-14% of GDP, key regulators. to 10%.  It will create a single-window e-  The draft policy has sought to optimize logistics market and focus on the the modal mix (road-60%, rail-31%, generation of employment, skills and water-9%) to global benchmarks (road making medium and small enterprises - 25-30%, rail - 50-55%, water - 20- competitive. 25%) and promote the development of multi-modal infrastructure.  Many countries, including South Korea and Singapore, came up with  The policy also recommends setting up this kind of policy in the early 2000s. a Logistics Wing that will be “the It covers the different types of logistics nodal agency tasked to identify key service providers. For example, some projects for driving first mile and last are just in freight forwarding, others in mile connectivity and to optimize the trucking, some act as full third-party modal mix to identify commodity and logistics providers. Typically, a policy the corridor for the most cost-effective will categorise each of these services mode of transport.\" and give minimum threshold requirements for entering the  Almost 25-30% of fruits and market. For a truck fleet operator, this vegetables produced in India are could be about minimum fleet size, wasted due to lack of cold chain

Easy to PICK192 - “UPSC Monthly Magazine” specifications of trucks, axle load and carrying capacity etc.  The policy will allow seamless multi- modal freight transfer and make freight movement for key commodities cost-efficient. The proposed policy also aims to standardise the key elements of a warehouse which will lead to new demand and capacity creation of Grade A warehouses. Challenges in implementation The main challenge is while some of the subjects covered under the policy come under the Centre, the rest are controlled by states. The development of multi-modal logistics parks, or rules to do with motor vehicle movement, come under states. So, unless there is alignment between the Centre and the states, this policy will be hard to implement.

Easy to PICK193 - “UPSC Monthly Magazine” Infrastructure Investment Trusts (InvITs) Syllabus subtopic:  Clause(13A) of Section 2 of the IT  Infrastructure: Energy, Ports, Roads, Act defines “business trust\" to mean a trust registered as an Infrastructure Airports, Railways etc. Investment Trust under the  Government Budgeting Securities Exchange Board of India (Infrastructure Investment Trusts) Prelims and Mains focus: about the move Regulation, 2014 or a Real Estate to boost private InviTs and its benefits Investment Trust under the Securities Exchange Board of India (Real Estate News: Union budget proposals are set to Investment Trusts) Regulation, 2014 boost investments in the infrastructure made under the Securities and space with tax exemptions for private Exchange Board of India Act, 1992, infrastructure investment trusts whose units are required to be listed (InvITs), which have emerged as an on a recognized stock exchange in investment route of choice for large accordance with the aforesaid institutional investors. regulations. Background  It is proposed to amend clause (13A)  The Income Tax (I-T) Act provides of Section 2 of the IT Act so as to omit the long line relating to the for a taxation regime for business requirement of listing of the business trusts. Definition of a business trust trust from recognised stock exchange means a trust registered as an InvIT or in accordance with the regulations a REIT under markets regulator Sebi made by the Securities Exchange and these units need to be listed on a Board of India. recognised stock exchange.  This amendment will take effect from  The private unlisted InvIT regime April 1, 2021 and will, accordingly, was introduced by Sebi in 2019 but apply in relation to the assessment year did not get the same tax treatment as 2021-22 and subsequent assessment the listed ones. years  Against this backdrop, the Finance Benefits to the move Bill 2020 said representations have  The private InvIT structure, now with been received stating that private unlisted InvITs should be given the the tax pass through, will not just be same status as public listed InvITs attractive to investors but also for the with regards to tax treatments provided sponsors who are looking to divest under the Act. their infrastructure assets. What did the budget propose?  Even for a sponsor, this is a good  The budget has now accorded tax move, because when you transfer the assets to a listed InvIT, you get a tax pass through status to private deferral, which was not available in the unlisted InvITs, which were till now private InvIT structure. This is just a available only to publicly listed transfer of assets, they are not being InvITs or those InvITs that were sold to a small group of investors and subsequently listed on exchanges.

Easy to PICK194 - “UPSC Monthly Magazine” sold, so to pay tax on such a transfer eligible infrastructure projects either was an issue for sponsors. directly or via special purpose vehicles (SPVs).  It is expected to see a lot of demand in  The InvITs are regulated by the SEBI the next 3-6 months. Even those who (Infrastructure Investment Trusts) were looking at listed InvITs might Regulations, 2014. end up going down the private path. It’s a good structure and a win-win for both investors and sponsors.  The private InvIT will become an attractive structure for large investors such as pensions and sovereigns. About Infrastructure Investment Trusts (InvITs)  Infrastructure and real estate are the two most critical sectors in any developing economy. A well- developed infrastructural set-up propels the overall development of a country. It also facilitates a steady inflow of private and foreign investments, and thereby augments the capital base available for the growth of key sectors in an economy, as well as its own growth, in a sustained manner.  Given the importance of these two sectors in the country, and the paucity of public funds available to stimulate their growth, it is imperative that additional channels of financing are put in place.  An Infrastructure Investment Trust (InvITs) is Collective Investment Scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.  The InvIT is designed as a tiered structure with Sponsor setting up the InvIT which in turn invests into the

Easy to PICK195 - “UPSC Monthly Magazine” Reverse Osmosis water purification technology Syllabus subtopic: essential salts. RO while useful in Science and Technology- Developments reducing salts does not tackle bacterial and their Applications and Effects in agents or trace chemicals and Everyday Life. Conservation, manufacturers often claim that additional Environmental Pollution and Degradation, filtration is required to deliver potable Environmental Impact Assessment. water. Prelims and Mains focus: about the prohibition and its significance; about BIS; What are BIS regulations on drinking NGT; CPCB; water filtration technology water? News: The Union Environment Ministry  Current BIS regulations consider 500 has published a draft notification that effectively prohibits users from mg/litre—1,200 mg/l of total installing membrane-based water dissolved solids, which consists of purification, mainly reverse osmosis, salts and some organic matter, as systems in their homes if the water has acceptable though there is no lower been sourced from a supply that meets limit. The regulations also put the the Bureau of Indian Standards’ onus on commercial bottlers, who drinking water norms. make RO water, to ensure that water that is lost in the RO production Why? process is stored in “safe, hygienic” The Ministry has issued this order to conditions and that a record of such comply with an order of the National water “wasted” is maintained. Makers Green Tribunal (NGT), which has of such systems have to register with prohibited the use of reverse osmosis the Central Pollution Control Board. (RO) purifiers in places where total dissolved solids (TDS) in the supplied  By June 5, 2022, RO manufacturers water are below 500 mg per litre. can only supply home purification systems that waste no more than 25% Background of the water and these systems must be  The Water Quality Association of able to inform consumers of the TDS levels at the inlet and water outlet, the India, which represents companies Ministry adds. that make RO systems, had moved the Supreme Court for a stay of the  The Delhi Jal Board, among others, NGT’s order. claims that the water it supplies meets BIS norms.  The SC declined to intervene and the NGT had directed the Environment How Does Reverse Osmosis Work? Ministry to issue a notification that Reverse Osmosis water purification restricted the use of water filters. process is accomplished by water pressure pushing tap water through a semi- Why did NGT ordered a ban on RO permeable membrane to remove filters? impurities from water. This is a process in The NGT had ordered a ban on RO filters which dissolved inorganic solids (such as on the grounds that they wasted water salts) are removed from a solution (such as and that, in the process of removing salts, water). they often deprived drinking water of

Easy to PICK196 - “UPSC Monthly Magazine” A few impurities found in tap water that  It is established by the Bureau of can be removed with Reverse Osmosis Indian Standards Act, 1986. filtration technology:  Fluoride  The Minister in charge of the Ministry  Lead or Department having administrative  Chlorine & Chlormamine control of the BIS is the ex-officio  Pesticides President of the BIS.  Nitrates & Sulfates  Detergents & more  Composition: As a corporate body, it has 25 members drawn from Central or About Bureau of Indian Standards State Governments, industry, scientific (BIS): and research institutions, and consumer  The Bureau of Indian Standards (BIS) organisations. is the national Standards Body of India  It also works as WTO-TBT enquiry working under the aegis of Ministry of point for India. Consumer Affairs, Food & Public Distribution.

Easy to PICK197 - “UPSC Monthly Magazine” Locust attack in Punjab Syllabus subtopic: Major Crops - Prompt action taken Cropping Patterns in various parts of the  As soon as swarms of locusts were country Prelims and Mains focus: about the spotted near the villages, a team locust attack; threat and action taken to including members from the contain it Agriculture Department and fire News: Swarms of locusts were spotted in brigade was pressed into service to two border villages of Punjab’s Fazilka eliminate pests. district, prompting the state Agriculture  About 400-500 tonnes of insecticides Department to sound a high alert. were used to eliminate the locusts. The Where did the attack originate from? boomer and tractor-mounted high Emanating from Pakistan, the swarms of velocity sprayers besides fire brigade pests — three to four-km-long and one- vehicles were used to control the pests. km-wide — settled at the trees in these  Timely action against the attack border villages. ensured their elimination and no What is the threat? damage was caused to crops. Any failure to control the pests could lead to serious implications for agriculture What are Locusts? production in India, especially in Punjab, Locusts, popularly known as ‘tiddi dal’, Haryana, Rajasthan and Gujarat, which are short-horned grasshoppers. Their will ultimately hit commodity prices and appearance in winter months is a new food security. phenomenon. Were there any previous locusts attack  Localised locust breeding was in India? controlled in 1998, 2002, 2005, 2007  India has not witnessed any full- and 2010. blown locust cycles after 1962.  Since 2010, the situation remained However, during 1978 and 1993, calm and no major breeding and swarm large-scale upsurges were observed. formation has been reported.

Easy to PICK198 - “UPSC Monthly Magazine” Samurai Loan Syllabus subtopic: Effects of What would be the funds used for? Liberalization on the Economy, Changes  The funds raised would be used in Industrial Policy and their Effects on Industrial Growth. towards implementing systems that would help the state-owned power Prelims and Mains focus: about the giant fund capex for installation of Samurai loans raised by NTPC and its Flue Gas Desulphurization (FGD) utility system that helps in substantial reduction of toxic sulphur oxide News: India’s largest power generator (SOx) emissions. NTPC Ltd has raised a $750 million- worth term loan in Japanese yen,  It would also be invested in NTPC’s claiming it to be the “largest ever” new hydro projects as well as Samurai loan raised by any Asian projects using ultra-supercritical corporate. technology, which are plants that require less coal per megawatt-hour What are Samurai loans? and, therefore, lead to lower carbon  Samurai loans allow non-Japanese emissions. firms to tap into the investment  Finance Minister said in her Budget capital available in Japan and speech that utilities running thermal borrow funds in yen, which is among power plants with high carbon the currencies with the lowest emission levels are advised to close interest rates. those plants with emissions above pre-set norms.  The cross border syndicated loan provides the borrower with capital to either enter the Japanese market or the ability to convert the proceeds into the firm’s local currency for use in existing operations. How were the funds raised?  The loan was raised under the automatic route of RBI’s External Commercial Borrowing regulations and has been fully underwritten by the State Bank of India in Tokyo, Sumimoto Mitsui Banking Corporation in Singapore and Bank of India, Tokyo.  The facility has a door-to-door maturity of 11 years — the period within which the amount would have to be paid back — under two tranches.

Easy to PICK199 - “UPSC Monthly Magazine” Declining Savings Rate Syllabus subtopic: Indian Economy and Context: India has been witnessing a issues relating to Planning, Mobilization of slowdown in consumption as well as Resources, Growth, Development and savings for a while now, raising questions Employment over the growth of real income in the Prelims and Mains focus: about the economy. declining savings rate in India and its causes Why are savings so important? What has been the trend in savings People can use their money for either rate? consumption or savings. Savings are an India is not alone when it comes to a important tool to help people smoothen out declining savings rate. Brazil, China and consumption. That is, they can use the South Africa too witnessed a substantial savings for a rainy day. However, savings decline in gross savings as a percentage of are also important for the overall gross domestic product (GDP) since economy, as they help in financing 2011. The decline came amid the slowest investments—whether they are public or growth in world trade. In India, the private. Therefore, higher savings would savings rate as a percentage of GDP has ideally reduce the cost of borrowing for declined by nearly 5% between 2011 and private investments. Reduction in 2018. government savings, deleveraging by companies and slower growth of Why cut exemptions amid falling household savings are driving the fall in savings? the savings rate.  A complicated tax structure creates inefficiency in income allocation.

Easy to PICK200 - “UPSC Monthly Magazine” Savings exemptions aim to promote certain instruments when one could use better financial instruments to save. For now, the government has left the option open for individuals to choose the existing system or to opt for the lower tax regime.  Besides, incentivizing savings through tax breaks is not the best approach to encourage savings. The impact of the proposed taxation system, however, has to be evaluated. Why is India’s savings rate going down?  The fact that income has grown over the last couple of years (albeit at a slower rate) makes it difficult to identify the reason for this fall. Even consumption growth has slowed down, which should ideally translate to higher savings.  One reason could be the shift towards services consumption such as health and education, which have become costlier. A bigger concern is the rise in household debt. Easy availability of no-cost EMIs on durables could be a big reason.